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FAR 52.232-5 Payments under Fixed-Price Construction Contracts


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Ok..Hello again Wifcon Friends....So FAR site 52.232-5 states that material delivered to the contractor at locations other than the site may also be taken into consideration if authorized by the contract, and if satisfactory evidence that it has acquired title to such material. Does anyone know if the FAR list the "Satisfactory evidence" or any other reference that does. The conditions that I have found to be considered are 1. materials are stored in a reasonable proximity to the construction site, 2. Ktr demonstrates clear title, 3. Materials must be accounted for in storage and not in transit, 4. the materials for which progress payments are requested are not susceptible to deterioration or physical damage. This information comes from a construction admin class text book but does not list references. If anyone has information on references please post. Thanks ~Mr. B

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I've only seen this list of criteria (though not identical) in reference to a Navy-specific clause, which is discussed in this ASBCA decision.

However, your summary of FAR 52.232-5 seems somewhat incomplete. FAR 52.232-5 says at para (B)(2):

In the preparation of estimates, the Contracting Officer may authorize material delivered on the site and preparatory work done to be taken into consideration. Material delivered to the Contractor at locations other than the site also may be taken into consideration if --

(i) Consideration is specifically authorized by this contract; and

(ii) The Contractor furnishes satisfactory evidence that it has acquired title to such material and that the material will be used to perform this contract.

(emphasis added). I would think that a paid invoice would be satisfactory evidence that the contractor has acquired title to the material.

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Ok..Hello again Wifcon Friends....So FAR site 52.232-5 states that material delivered to the contractor at locations other than the site may also be taken into consideration if authorized by the contract, and if satisfactory evidence that it has acquired title to such material. Does anyone know if the FAR list the "Satisfactory evidence" or any other reference that does. The conditions that I have found to be considered are 1. materials are stored in a reasonable proximity to the construction site, 2. Ktr demonstrates clear title, 3. Materials must be accounted for in storage and not in transit, 4. the materials for which progress payments are requested are not susceptible to deterioration or physical damage. This information comes from a construction admin class text book but does not list references. If anyone has information on references please post. Thanks ~Mr. B

Why do you need a specific reference?

The contract needs to specifically authorize payment for off-site materials, outside the payment clause.

The specific authorization can include reasonable conditions that you cited. There can be higher risks for off-site materials than with on-site materials that the government can put its hands on and seize if necessary for default.

We used to include requirements in certain Corps of Engineers civil works contracts for large fabricated items like dam or lock gates, custom valves, bridge components, etc. One of our conditions was that the material had to be part of something included in fabrication, specifically identifiable for our piece of machinery or equipment, which wasn't easily convertible to other uses. Raw materials or steel that could be used for other purposes did not qualify. The contractor also had to prove title (paid invoices for the specific lots)

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Guest carl r culham

Mr - There is no specific FAR reference that I know of beyond the referenced payment clause that you have noted. As provided by others there does need to be an affirmative statement in the contract terms and conditions that materials stored off site will be paid for. I have seen this done by adding a special clause or by reference in the specification section of the contract. You have touched on the evidence of title etc. which I have seen handled in many ways. I did some Google-ing in an attempt to find some references for you. I did find this form - sorry - but I tired to just send a link but could not figure out how. The Google terms I used to find this were "specification for materials stored off site".

STATE OF WISCONSIN

DEPARTMENT OF ADMINISTRATION

DIVISION OF STATE FACILITIES (DSF)

DOA-4528 (R01/96)

s. 16.855(19) Wisconsin Statutes

Mailing Address: Post Office Box 7866, Madison, WI 53707-7866

Street Address: 101 E. Wilson Street, 7th Floor, Madison, WI 53702

Phone: 608 / 266-2731; FAX: 608 / 267-2710

http://www.doa.state.wi.us/dsf

OFF-SITE STORAGE AGREEMENT

SPECIAL PROCEDURE FOR OBTAINING PAYMENT FOR MATERIALS

NOT STORED AT THE SITE OF THE WORK

This agreement applies only to:

Project

Project No. Contract

Due to the limited amount of space available for the storage of materials at the site, the Division of State Facilities (DSF) will, under the following conditions, approve partial payments for certain materials stored off the premises.

1. Prior Approval - The Contractor shall obtain the approval of DSF before making any arrangements to obtain a certification for payment for materials stored off the site. Materials must be suitable for storage and must be properly packaged if this is necessary.

2. Storage Site - The Contractor shall furnish and maintain a suitable storage site and proper storage conditions which must be approved in advance by DSF?s Project Representative. The site must be within the State of Wisconsin.

3. Storage Conditions - The material covered by the Request for Certification for Partial Payment must be stored above grade, and must be properly protected at all times against weather, heat, cold, moisture and other hazards as the material may require. The storage conditions must be approved by DSF. All protection must be provided by the Contractor at his own expense, and must be maintained throughout the storage period.

Material must not be co-mingled with other similar material, but must be stored by itself and must be plainly labeled ?Property of the State of Wisconsin?.

It must be stored so that it can be readily inspected, measured and counted at all times by DSF?s Project Representative.

4. Bill of Sale - Request for certification for partial payment for materials stored under the above conditions must be accompanied by a Bill of Sale, properly identifying the material and transferring ownership of the materials to the State of Wisconsin. The Bill of Sale must be accompanied by an inventory of the stored material together with a description of the storage site by Street Number and City, or by legal description of the premises.

5. Insurance - DSF shall be notified to cause the Builders Risk, Fire and Extended Coverage Insurance Policy covering this project to include the materials stored off-site, in the amount and under the same conditions as that provided for material stored on the site of the project. The signing of ?Storage Conditions Approved? shall be confirmation that insurance coverage has been provided. Unless Specifically exempted by DSF, the Contractor shall furnish insurance against loss by theft or vandalism, and the State of Wisconsin shall be named the beneficiary under the policy, as trustee for all concerned.

Certificate of Insurance must be provided to DSF?s Project Representative prior to approval of this agreement.

Off-Site Storage Agreement

Page No. 2

6. Responsibility - The Contractor agrees that in accepting partial payment for the stored materials he is in no way relieved of responsibility for the safe storage of the material and its safe transportation to and installation in the work, or for furnishing and installing the material in strict accordance with drawings and specifications.

The Contractor also agrees that acceptance by DSF of a Bill of Sale for the material does not imply acceptance of the material, which shall be subject to final acceptance or rejection up to the time the Contractor?s work is completed and finally accepted.

The Contractor also agrees that the usual guarantee covering his work under the drawings, specifications and contract, are in no way impaired as a result of the partial payment, and the acceptance of the Bill of Sale.

DSF accepts no responsibility in connection with the material.

7. Acceptance - The Contractor shall indicate his acceptance of the above conditions by signing and returning one copy of this storage agreement.

ACCEPTED

Date Contractor

STORAGE CONDITIONS APPROVED

Date DSF Project Representative

Material Stored

Storage Site

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  • 3 years later...

Here is an example of a clause that would specifically authorize payments for off-site stored materials on construction contracts that include contract clause 52.232-5

It comes from the old Engineer FAR Supplement, which has been rescinded.

"52.232-5000 Payment for materials delivered off-site.

As prescribed in 32.111(S-100), insert the following clause in solicitations and contracts for construction.

PAYMENT FOR MATERIALS DELIVERED OFF-SITE (MAR 1995) EFARS

( a ) Pursuant to FAR clause 52.232-5, Payments Under Fixed Priced Construction Contracts, materials delivered to the contractor at locations other than the site of the work may be taken into consideration in making payments if included in payment estimates and if all the conditions of the General Provisions are fulfilled. Payment for items delivered to locations other than the work site will be limited to: (1) materials required by the technical provisions**; or (2) materials that have been fabricated to the point where they are identifiable to an item of work required under this contract.

( b ) Such payment will be made only after receipt of paid or receipted invoices or invoices with canceled check showing title to the items in the prime contractor and including the value of material and labor incorporated into the item. In addition to petroleum products, payment for materials delivered off-site is limited to the following items: [List items for which payments will be made for off-site delivery]

(End of clause)"

** If I were writing the clause, I'd be very wary of paying for raw construction materials stored off-site that could easily be diverted for other contracts or uses and those that are easily stolen. Off-site materials should be specifically identifiable for the contract. Sand piles, gravel piles, cement and admixtures at a Readi-Mix plant are some examples that one would not want to include in the list.

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